Pharmacy Franchise Owners Association: Medicine Shoppe International and Medicap Face Claims Filed by Numerous Franchisees

ST. LOUIS and DES MOINES, Iowa, Dec. 15, 2011 /PRNewswire/ --  Medicine Shoppe and Medicap pharmacy owners from across the nation are filing claims against their parent companies Medicine Shoppe International (MSI) and Medicap (MC) for breach of contract for their failure to support the franchise systems.  Medicine Shoppe and Medicap are wholly-owned subsidiaries of Cardinal Health Inc., one of the nation's largest pharmaceutical distributors.

The independent pharmacy owners claim that they invested into a thriving system of branded stores, supported with a variety of agreed-upon services to be provided by MSI/Medicap. In recent years, those services have dwindled in an arbitrary decision by MSI/Medicap to stop supporting its own franchise system, while remaining steadfast in its collection of exorbitant franchise fees.

Concurrent with the reduction in services, Medicine Shoppe and Medicap have introduced an offer to new franchises whereby they may join the system for just $499 per month.  The remaining franchisees, such as those involved in the litigation, pay more than 5 percent of store sales as royalties to MSI/Medicap, a figure that reaches $25,000 per month in some cases.  

"American consumers overwhelmingly prefer independent pharmacies over "big box" retailers, yet MSI/Medicap has treated their own franchisees in such a hostile and unfair way as to make our businesses uncompetitive," says Gaye Moseman, one of the pharmacy owners filing a claim.  "For Medicine Shoppe and Medicap, by their own hands, to so damage our livelihoods and ability to fulfill the needs of our customers is morally unacceptable."

The filing of legal claims is the last step in a multi-year effort on the part of the franchisees to negotiate with MSI/Medicap and to re-align the franchise relationship to better reflect the real value of MSI/Medicap diminished support services.

"Medicine Shoppe and Medicap's failure to provide meaningful support, coupled with their exorbitant franchise fees, put the independent pharmacists in an untenable position through no fault of their own," says Robert Zarco, lead attorney representing the claimants, and member of Miami-based Zarco Einhorn Salkowski & Brito specializing in franchise, licensing and distribution law. (www.zarcolaw.com)

SOURCE Pharmacy Franchise Owners Association